Macau concessionaires well-placed to ride out COVID-19 liquidity concerns: Bernstein

May 30, 2022 Macau Earnings & Filings Industry Updates

Macau’s concessionaires are, for the most part, well-placed to ride out liquidity concerns linked to COVID-19 and related border restrictions, despite such concerns continuing to suppress stock performance.

The mostly positive view is expressed in a note from brokerage Bernstein on Friday in which analysts Vitaly Umansky, Louis Li and Shirley Yang assess the individual liquidity positions of all six concessionaires.

While the analysts note that SJM Holdings, which is yet to confirm long-awaited bank refinancing, would have only three months’ worth of cash on hand under a “worst case” scenario of zero revenue – essentially meaning a complete closure of either Macau’s casinos or its borders – more realistic scenarios paint a far rosier picture.

“Under a more reasonable zero-EBITDA environment, cash burn (including liquidity from credit facilities) increases to seven months for SJM, 17 months for Studio City and over 30 months for all others,” they write.

“Under a scenario where EBITDA returns to best quarter EBITDA for each operator (since COVID-19 began, most operators recorded best quarter in 2Q21), cash burn decreases significantly.”